If you’ve been aiming for a retirement savings target of $1.46 million, you might want to hit pause. Financial experts assert that a fixed figure like this does not guarantee a comfortable retirement for everyone.
Individual circumstances such as lifestyle choices, living location, and economic status greatly affect the ideal savings figure. A much more effective strategy, financial advisers suggest, is identifying your retirement goals and crafting your savings plans around them.
This approach allows for flexibility and adaptability, important factors in keeping your savings strategy aligned with the changes in your income, expenditure, and lifestyle.
Massachusetts-based Professional Financial Planner (PFP) Tricia Rosen emphasizes that the optimal retirement savings amount is highly individualized. A host of factors including lifestyle, risk tolerance, projected life expectancy, personal assets, and financial goals impact this optimal amount.
According to Rosen, retirement planning is not a ‘one size fits all’ scenario. Your unique financial situation and goals should serve as the foundation of a customized retirement plan created in partnership with a PFP.
Adjusting retirement goals to individual needs
On the other hand, PFP Ashley Ritterhaus asserts that setting the retirement goal as high as $1.46 million can be intimidating for those who haven’t started saving. Rather than aiming for an impractical ideal, Ritterhaus suggests setting attainable and individualized retirement goals.
Recent trends with rising consumer goods and services prices have caused an increase in retirement savings targets by 53% over the last four years, from $951,000 to $1.46 million, says Andrew Herzog, PFP. This paints a clear picture of the economic doom and gloom felt by many Americans and their efforts towards securing a stable financial future.
Herzog introduces a handy tool, the 4% rule, to help calculate the retirement savings needed based on forecasted annual retirement costs. However, this is a guide rather than a fixed rule and might need adjustments based on individual circumstances.
Lastly, Florida-based Charles Curry, PFP, advises focusing more on consistently growing savings and investments, instead of chasing a specific figure. The final retirement fund can sometimes be less than anticipated due to unexpected lifestyle and financial considerations.
